A country’s Gross Domestic Product is the value of all goods and services produced within a country in a given time period. It represents the health of a country’s economy, High inflation erodes the value of a currency and is therefore considered very bad for any economy in most circumstances. Central banks normally target an inflation level of around 2-3%, and if their target is exceeded, they usually take action to get back to the desired levels. When inflation is high, the market begins to expect that central banks may increase interest rates, reducing the supply of money Inflation which directly affects the strength of its currency. GDP is normally released monthly or quarterly, and the outcome is compared to the country’s forecasted growth.
Note: Traders compare the actual GDP with what the market is/was expecting. If GDP exceeds the forecast, the currency is likely to strengthen, while a lower than expected GDP release tends to weaken the currency